Futures Continued Their Downtrend, While Trading Sentiment Recovered Slightly [SMM Cast Aluminum Alloy Morning Comment]

3.23 SMM Morning Comment on Cast Aluminum Alloy

Futures: Overnight, the most-traded aluminum alloy 2605 contract closed at 22,595 yuan/mt, down 120 yuan/mt from the previous settlement, a decline of 0.53%. Trading volume was 3,147 lots (-363), with shrinking trading volume and lower market activity. Open interest was 4,758 lots (-23), indicating a slight decline and emerging willingness of funds to exit. All three lines remained in the weak 20-50 range, and the market as a whole was still in a post-oversold repair phase, but no effective golden cross had formed (the candlestick did not break above the D line). Although downward momentum had eased somewhat, rebound momentum remained insufficient. The J value was slightly below the K and D lines, indicating continued short-term downward pressure and warranting caution over a second dip. VR was in the low-price 40-80 range, which belongs to the oversold zone, reflecting that bearish momentum was gradually exhausting and suggesting the possibility of a staged rebound, but confirmation from trading volume was still needed.

Industry updates: (1) Aluminum scrap: According to the latest customs data, China aluminum scrap imports totaled about 329,000 mt in January-February 2026, up about 1.8% YoY, of which 193,000 mt was imported in January and 136,000 mt in February. By source country, China aluminum scrap imports in January-February mainly came from Thailand, the UK, Japan, the US, and other countries and regions, with Thailand accounting for about 20.3% of total imports. (2) Alloy: According to customs data, imports of unwrought aluminum alloy were 90,300 mt in January 2026, down 9.4% YoY and down 3.1% MoM. Imports of unwrought aluminum alloy were 65,800 mt in February 2026, down 28.2% YoY and down 27.1% MoM. Cumulative imports in January-February 2026 were 156,100 mt, down 18.5% YoY.

Spot-Futures Price Spread Daily: According to SMM data, on March 20, the theoretical premium of the SMM ADC12 spot price over the 10:15 closing price of the cast aluminum alloy the most-traded contract (AD2604) was 1,650 yuan/mt.

Warrant Daily: SHFE data showed that on March 20, the total registered warrant volume for cast aluminum alloy was 47,732 mt, down 1,109 mt from the previous trading day. Of this, total registered volume in Shanghai was 3,692 mt, down 363 mt from the previous trading day; Guangdong 17,920 mt, down 392 mt; Jiangsu 5,475 mt, down 568 mt; Zhejiang 15,234 mt, down 1,145 mt; Chongqing 3,934 mt, down 119 mt; and Sichuan 1,477 mt, up 0 mt.

Aluminum scrap: Last Friday, the spot price of primary aluminum fell 420 yuan/mt from the previous trading day, and the aluminum scrap market declined overall in tandem. Supply side, regulatory policies such as reverse invoicing were expected to remain unlikely to see any substantive easing in the short term this week, keeping compliance costs in the aluminum scrap recycling chain elevated and continuing to suppress raw material circulation efficiency. Demand side, expectations of aluminum prices remaining in the doldrums were set to slightly weigh on the purchase sentiment of traders and downstream scrap utilization enterprises. In addition, the peak season of “Golden March and Silver April” fell short of expectations, with the pace of end-user order releases lagging notably behind the seasonal pattern. Most downstream scrap utilization enterprises mainly purchased as needed, lacking the momentum for large-scale restocking. In the short term, close attention was still needed on the impact of geopolitical conflicts on fluctuations in primary aluminum prices, the actual recovery of end-user orders, and the actual implementation progress of supply-side policies, with vigilance against the risk of wild swings in prices at elevated levels.

Silicon metal: Last week, silicon metal futures prices fluctuated sharply, falling first and then edging back up. The center of spot transaction prices was weaker than in the previous week, while some downstream purchase orders were released, lifting trading volume. SMM east China oxygen-blown #553 silicon was at 9,000-9,200 yuan/mt, and #441 silicon was at 9,300-9,500 yuan/mt. Silicon enterprises showed strong sentiment to hold prices firm, and the tug-of-war between sellers and buyers focused on changes in the supply-side operating rate.

Markets outside China: Current overseas ADC12 quotations were in the range of $3,300-3,400/mt, while immediate import losses continued at around 2,000 yuan, leaving the theoretical import window closed.

Summary: Spot side, market quotations were generally lowered last Friday, with the SMM ADC12 price down 300 yuan/mt to 25,000 yuan/mt. Driven by the price pullback and weekend restocking demand, market trading sentiment recovered somewhat from the previous period, and downstream willingness to buy the dip increased, improving transactions for some enterprises. However, overall demand was still mainly driven by rigid demand, with end-users sensitive to price fluctuations and maintaining a cautious restocking pace. In the short term, ADC12 prices are expected to remain in the doldrums. The demand-under-pressure pattern was unlikely to change in the short term, downstream acceptance of high prices remained limited, and coupled with weak primary aluminum trends weighing on market sentiment, prices struggled to rise; however, with cost support, downside room was also limited. Going forward, focus should remain on primary aluminum trends and the pace of downstream consumption release.

[Data source declaration: Except for public information, all other data is derived by SMM based on public information, market communication, and SMM's internal database models, and is for reference only and does not constitute decision-making advice.]